Thursday 3 March 2011 17.21 EST
First published on Thursday 3 March 2011 17.21 EST

The Charity Commission is examining a £330,000 loan made to financially stricken Plymouth Argyle by a body whose purpose is to promote the training and education of young footballers.

The Plymouth Argyle Supporters Training and Development Trust was set up in 1995 as a charity linked to the club, with fans donating money to help fund Argyle's youth development programme. In 2008 the trust sold lodgings used to house the club's trainee players, and since then has been concerned with promoting youth football more widely in the Plymouth area.

With Argyle, now said to be £13m in debt, desperate for money last month and facing a winding-up petition from Her Majesty's Revenue and Customs, the trust resolved to loan the club £330,000. It was secured by a mortgage on the Home Park ground, which the club have said now ranks second in priority of four mortgages on the stadium, after the finance company Lombard, understood to be owed approximately £2m.

The charity is said to have loaned the money at a rate of interest higher than current low saving rates, for an unspecified short period. At the time it loaned the money to the club, it said in a statement: "Following an opportunity to invest in Home Park Stadium, the trust has agreed to provide a short-term mortgage secured on Home Park Stadium. The trustees are pleased to have been able to agree a package which will benefit both parties."

The club posted that statement on their own website and Peter Ridsdale, who was acting as adviser to the board before he stepped back from day-to-day involvement this week, said they believe it is entirely above board. The trust is understood to have taken legal advice before the trustees voted to make the loan to the club.

However, some supporters reacted with fury at the trust lending money to the club when Argyle were facing potential insolvency, which could make it difficult for the trust to recover its loan. Attention also focused on the role of Paul Stapleton, a director and deputy chairman of the club and also a trustee of the charity. The trust's chairman, Jeff Ellis, said Stapleton did not vote as a trustee, so had no conflict of interest, but Stapleton did address his fellow trustees in a meeting about the club's financial position.

The Charity Commission will not say who made formal complaints but a spokeswoman confirmed that "a couple" had been received and it has asked the trust to supply further details. "We have contacted the trustees of the charity and requested more information regarding the loan made to Plymouth Argyle football club," the spokeswoman said. "We are currently considering the information they have provided. We have not launched a formal investigation at this stage."

Ian Newell, a co-owner and moderator of the Argyle fans' PASOTI web forum, said he did not make a complaint but is unhappy with the circumstances of the loan, despite the club's parlous financial position. "A lot of people feel very strongly," he said. "We know the trustees are supporters of the club and will have wanted to do the right thing. But when I discovered that Paul Stapleton was a trustee as well, even if he did not vote, I find that difficult to live with."

Neither Stapleton nor Jeff Ellis, the trust's chairman, returned the Guardian's calls to discuss the loan. Ridsdale, who stepped back from daily involvement at Argyle this week, argued that because the trust has the security of the Home Park mortgage, it will be able to recover its money even if the club go into administration, as seems increasingly likely, or even into liquidation.

Argyle's board is due to hold a meetingon Friday, described in a remarkable statement by the club's staff, who have not been paid their February wages, as "probably the most important in Plymouth Argyle's 124-year history". The statement criticised the club's directors for giving "unclear and unhelpful mixed messages" about the club's predicament and called on them to "put aside any personal interests and act only in the best interests of the club".

The directors stand to lose substantial sums they spent buying shares or making loans to Argyle if the club go into administration. However, Ridsdale said that if around £3m is not received by Friday to pay the wages, tax and ongoing liabilities, the club's lawyer will advise that Argyle are insolvent and should be placed into administration. So far, despite promises from the club's Tokyo-based director George Synan, no such money has appeared.

Graham Clark, chairman of the Argyle Fans' Trust, not connected to the charity, said that without huge money arriving, administration, although very difficult for creditors, would be the right solution, due to the "huge liabilities" run up by the current board.